As Gary Schoenfeld, former CEO of PacSun, said in yesterday's Death and Life of Retail keynote speech during the UCLA Anderson Forecast, the critical question is How Big and How Fast? The players who can successfully address the following are those who will survive and thrive:
Why does the consumer need you?
Innovation, assortment, and experience
Omni-channel: inventory, insights, and engagement
Love vs Like
None of us can win on breadth, price, or convenience: Amazon is unmatched on those fronts. They offer creative content, artificial intelligence, cloud storage, logistics, big data and customer insights, and a breadth of assortment.
70,000 businesses sell on Amazon
They have 80,000,000 Prime members
They earned 50% of ALL retail GROWTH in 2015 and 2016 in the U.S.
They earn 1/3 of all online sales
And where normal conversion rates are 1.5%, Amazon gets 70% conversion with their Prime members.
By 2020 online sales will approach 50% of all retail sales in the U.S., and total AMAZON sales could exceed sales at all the regional malls in the U.S. combined.
In the last 30 days alone – so essentially since Labor Day 2017, Walmart has added Google Express, Nordstrom has opened stores with NO merchandise, Kohl's has become a return center for Amazon (who would want that headache?), and Toys R Us has declared bankruptcy – BEFORE Christmas – a move essentially unheard of in retail spheres.
What's going on in malls: to survive you must be in a preeminent destination; consider repurposing space; there will be a pressure on rents; evolution on tenant mix; and more food and entertainment.
So How Big and How Fast? VERY big, and VERY fast. Engage in the digital world, embrace young people, and imagine dramatic radical change.